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The problem of NPA is more often in news nowadays. On one side with farmers committing suicides due to failure to repay loans and on the other side, 29 PSB writes off nearly 1.14 lakh crore rupees have raised serious concerns. With gross NPA’s at nearly 4.5 lakh crore for the fiscal 2015, the credibility and the way banking sector is working needs to be relooked.
With huge NPA piling up, the banking sector has lost the ability to take back the loans from the customers. The sector which sometimes performs discreetly by giving away huge loans to big corporate houses and for small borrowers via government schemes has failed most of the time in servicing the loans.
Another issue is lack of proper credit assessment. Banks tend to over value the assets before granting the loans. This happens more due to political patronage to vested interests. The lack of trained manpower to handle such risks related to credit assessment is only amplifying the problem.
Way forward